No longer poles apart as ties increase

According to Liugong's half-year report in August, it achieved 6.6 billion yuan in revenue in the first half, a year-on-year decline of 10 percent. The net profit was 261 million yuan, a 16 percent drop year-on-year.

The company said the profit performance was better than expected.

China's machinery industry has been gloomy from the beginning of the year.

About 12,000 machinery producers - 16 percent of all companies in the sector - recorded losses in the first half. That was still an improvement from the start of the year, when 22 percent of companies in the industry were losing money, according to the China Machinery Industry Federation.

Looking further

It is good for Chinese companies to go overseas and expand their businesses, but it is more important for those companies to realize real growth after takeovers, said Cai Weici, vice-president of the federation during the first-half industrial performance conference in August.

"Chinese companies are working on upgrading their technology and production in order to gain back market share, which had been dependent on imports," he said.

Liugong is not the only company in the construction machinery industry to go overseas.

Last year, China's Sany Heavy Industry Co Ltd acquired Intermix GmbH, a German truck mixer maker, and Xuzhou Construction Machinery Group acquired a majority stake in German's Schwing Group GmbH, a concrete pump maker.

According to China's 12th Five-Year Plan (2011-15) for the machinery industry, the industry's sales volume will amount to 900 billion yuan by 2015. Outbound acquisition is an efficient way to realize this goal.

However, both the number and volume of overall Chinese companies' outbound mergers and acquisitions this year are dropping.

According to a report from PricewaterhouseCoopers China, China had 78 outbound M&As during the first half of the year, 20 percent drop compared with the same period last year, a record low since 2010.

In the first half of 2012, there were 95 outbound M&As by Chinese companies.